Pension Spikers

TW: Old Pete was just doing what the rules let him, I suppose one cannot blame him too much. But one can curse the rules. This stuff goes on all over the country. Folks will bend and massage rules to their personal gain. There are no such things as free markets only free-for-alls dominated by self-interest and power levers.

But at the end of the day funds are finite, letting the Pete's of the world sally up to the trough is literally taking money away from other uses. Uses which are arguably more beneficial to society. The capper is he is double-dipping now as well $241K pension and $176K "consulting contract".

This fire captain is part of a public service union. As I have said before I believe folks tend to think of public service unions as unskilled jobs, most are not. But fire, police, teachers, prison guards have some of the fattest deals out there. They must be examined for belt-tightening just like the others.

And I assure similar and worse pension shenanigans go on in the private sector, especially for executives.

From WSJ:
"...Pete Nowicki had been making $186,000 shortly before he retired in January as chief for a fire department shared by the municipalities of Orinda and Moraga in Northern California. Three days before Mr. Nowicki announced he was hanging up his hat, department trustees agreed to increase his salary largely by enabling him to sell unused vacation days and holidays. That helped boost his annual pension to $241,000.

...The boost was legal, and Mr. Nowicki said he is receiving a permissible pension. "People point to me as a poster child for pension spiking, but I did not negotiate these rules," he said.

The fire district's board agrees. "Chief Nowicki abided by existing rules and guidelines for optimizing his retirement pay," said Frank Sperling, the board's vice president. "I don't fault him. The system itself is broken. We need to change the system."

Mr. Nowicki's situation isn't unique. Contracts that permit a jump in salary just before retirement -- boosting the pension payout -- have been around for years. But as tough times are putting more scrutiny on public pensions, Mr. Nowicki's case has sparked particular anger from colleagues and local residents. Some recently demanded an explanation from the department trustees and others have lobbied the Orinda council to divert funds away from the fire department.

..."It's only a minority of workers who engage in pension spiking," said Lawrence McQuillan, a director at the institute. "But it adds up to real money."

...Mr. Nowicki recently turned 51 years old. If he lives another 25 years, his pension payments will cost the fire district an estimated additional $1 million or more over what he would have received had he retired at a salary of $186,000, not including cost of living adjustments, a fire board representative said.

In addition to drawing his pension, Mr. Nowicki currently is working for the fire department as a consultant at an annual salary of $176,400 while the department searches for his replacement..."